Original articleFrom concept to CPT code to compensation: how the payment system works
Section snippets
Introduction and the basics
First, some of what is to follow may seem a bit dry (even including a few formulas), but it is well worth your while to get a tall, cool drink and read on! This is, after all, the basis for the financial viability of your practice. Also, the abbreviations and acronyms are numerous and can initially seem overwhelming, so a glossary has been included at the conclusion of the article.
Though all long for the days when payment for medical services was actually based on charges determined by
Coding: a brief history
The American Medical Association (AMA) in 1966 recognized the need for an organized method that would be compatible with developing computer technology for describing medical procedures. With input from multiple medical specialties, including radiology, the Current Procedural Terminology (CPT) was developed. Initially a three-digit coding system, this subsequently evolved into the five-digit version (CPT-4) [5] in use today. Currently consisting of over 8000 codes, this system acts as a
Maintenance of CPT
Clearly, with a coding system of this magnitude and the constant evolution of medical care delivery, a sophisticated process [6] must exist so that the system continues to include all currently performed procedures and reflect the practice of medicine. The oversight body charged with this task is CPT Editorial Panel. This group of 16 members consists of
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11 practicing physicians appointed by the AMA’s Board of Trustees (note that all specialties are thus not represented on the panel at all
The relative value system: a brief history
Prior to 1992, physician’s services were reimbursed on the basis of the “usual, customary, and reasonable” format, based on historical charges. There was a growing perception that the system had evolved inequitably, particularly when comparing procedural and nonprocedural services (e.g., one coronary artery bypass grafting procedure equaled approximately 35 office visits). Congress began the process of considering options to create a payment system reflecting the relative physician work of the
Maintaining relativity
To ensure input from organized medicine to this new system of relativity, the AMA established the Relative Value Update Committee (RUC) [9], whose charge was to advise the HCFA (now the CMS) on appropriate relative values for codes for new procedures approved by the CPT Editorial Panel and maintain accurate relativity. This committee was constructed to include representatives of all the major medical specialties as well as representation from the CMS, the AMA, and the HCPAC. The RUC is charged
Resource-based practice expense
Initially in 1992, only the physician work element of the three-part reimbursement MFS was mandated to be “resource based” and subjected to this formal scrutiny. The practice expense element RVUs continued to be based on historic charge data. Congress mandated that this element also be converted to a “resource-based” system. This conversion occurred through a gradual 4-year transition from 1999 to 2002. Several methodologies for this change were examined by the CMS. Again, the AMA and medical
Malpractice RVUs
With the implementation of the MFS, the malpractice cost element of physician reimbursement, designed to cover the cost of professional liability insurance, was estimated to be valued at 4% of overall reimbursement. It was not until 2000, again on the basis of legislation passed by Congress, that the CMS devised a system to attempt to convert the malpractice reimbursement to a resource-based system. Using data on malpractice premiums for each of the major specialties from all 50 states, the CMS
Opportunities to evaluate the fee schedule and comment
Clearly, the MFS has evolved into a complex, multifaceted system. Moreover, because Medicare is the largest single payer and the majority of other payers use this system, continuous monitoring by all physicians, predominantly through their respective specialty societies, is critical. Fortunately, the CMS is mandated to publicly announce, through the Federal Register, the anticipated fee schedule for the following year. This is done first in a “proposed rule,” usually distributed during the
A real example
Now that you have been introduced to all the steps along the way, let us follow a new procedure from new clinical concept through to inclusion in the MFS. CT angiography (CTA) will be used as a true recent example. Prior to 2001, there were no “accurate” codes for CTA procedures. Following the development of slip-ring CT scanners and, subsequently, multidetector scanners, clinical research was performed at many institutions, and a significant body of peer-reviewed literature demonstrated the
The timeline
The amount of time it takes a new procedure to reach the stage of code request is obviously quite variable depending on how quickly the research demonstrates safety and efficacy. The CPT is published once a year, and any changes become effective January 1. The new MFS that recognizes the new and revised codes in that new edition of CPT is released just prior to that date for implementation on January 1. However, to meet all of the federal notice requirements as well as satisfy the complete CPT
Summary
Radiologists and radiation oncologists spend a tremendous amount of time developing the skills of their respective professions and continually strive to stay current with developing new medical procedures to properly care for their patients. For the health of their practices, they must be equally knowledgeable about the business of medicine, specifically the mechanisms through which the payment schedules for their important services are developed. Using CTA as an example, and the MFS as the
AHA
The American Hospital Association, a trade association of hospitals.
AMA
The American Medical Association, which owns the copyright for and publishes CPT book and related educational materials. The CPT Editorial Panel, RUC, and PEAC are all AMA committees.
CF
Conversion factor (in dollars per RVU), adjusted annually and used by the CMS to convert RVUs to dollars.
CMS
The Center for Medicare and Medicaid Services (formerly the HCFA), the federal governmental agency, under the US Department of Health and Human
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Estimating physicians’ work for a resource-based relative-value scale
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(1988) - et al.
Resource-based relative valuesAn overview
JAMA
(1988) Medicare RBRVSThe physicians’ guide
(2003)- Omnibus Reconciliation Act of 1989 (PL...
Current procedural terminology, CPT 2003
(2003)
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2017, Journal of the American College of RadiologyCitation Excerpt :Examples of direct expenses include staff, supplies, and equipment. These direct expenses are then incorporated into the broader CMS practice expense methodology [2] along with variables such as the ratio of direct to indirect costs, room time allocations, equipment utilization, and interest rates, with additional superimposed budget neutrality adjustments. Several of these variables have undergone statutory and regulatory updates since the inception of the RAW.
How Is Physician Work Valued?
2017, Annals of Thoracic SurgeryCitation Excerpt :This federal agency, later to be known as the CMS, was charged with the administration and oversight of Medicare. Historically, critical to the adoption and continuation of CPT in reimbursement were several decisions by the HCFA and the U.S. Congress [7]: 1983: included CPT in the HCFA Common Procedure Coding System
Benchmarking Academic Anatomic Pathologists: The Association of Pathology Chairs Survey
2016, Academic PathologyCitation Excerpt :The physician work relative value unit (wRVU), originally conceived by Hsiao et al for standardizing workloads and payment for physician services across specialties, is now central to the formulas that determine Medicare payments for those activities, with indirect effects on reimbursements by other payers.1,2 Specific wRVU values have been assigned to each of the clinical activities defined under the common procedural terminology (CPT) classification scheme.3 With the recognition that reimbursement per se is an imperfect measure of a given physician’s clinical contributions owing to variability in contractual revenue recovery, wRVUs are used to assess productivity.